Cigar Craze Flames Out

Two years ago, cigar sales were smoking.

Buoyed by glossy magazines touting stogies as an accessory of the hip elite, sales skyrocketed. In 1996, sales of premium, hand-rolled cigars jumped 67 percent. The next year, they leapt an additional 30 percent.

Cigar night at the Mansion Hill Inn, which once boasted the longest continuously running cigar night in the country, couldn't compete with the dozens of restaurants and bars offering their own promotions.

"EVERYBODY was doing a cigar event," said owner Steve Stofelano Jr.

But indications now are that the fad is flaming out - and fast.

Across the Hudson River in Troy, N.Y., J. Cabrella Inc., a two-year-old cigar shop, has filed for bankruptcy, citing more than $71,000 in obligations to creditors.

Love of the Leaf, a shop five miles north in Loudonville, snuffed its operation months ago. And clearance deals are the norm at overstocked cigar shops across the region.

Cuban cigars could bring the charm back to cigar sales.

For them, cigars have come and gone. "Everybody, if you will, has been there, done that," he said.

It's the same story 200 miles west in Rochester, where restaurateur Ziad Wehbe isn't bothering to replenish cigar stocks at Oasis Mediterranean Bistro.

"I don't think anyone cares about them any more," he said.

The "cigar great awakening" was bound to crash, said Gerald Celente of Trends Research Institute in Rhinebeck, N.Y. The boom was marketing-driven, rather than consumer-driven, and reality couldn't sustain the imagery, especially among women.

"It's very unfeminine, and they stink," Celente said. "Despite all the hype and the glossy advertising, women were never going to become cigar smokers en masse."

And cigar smoking has a heavy "repulse factor" that makes cigar smokers a nuisance at parties and restaurants, Celente said.

For 1999, analysts predict a 10 percent fall in sales of premium cigars. Three cigar companies, JR Cigar Inc.; General Cigar Holdings and Dimon Inc., showed quarterly revenues down significantly from the same period in 1998. Holt's, another cigar company, saw its stock rating downgraded by Prudential Bache.

"The fact is there's a limited market out there, and its saturated," Brown Brothers Harriman analyst Roy Burry said.

The cigar business crested in 1964 when Americans were smoking 9 billion yearly. By 1992, government health warnings had caused the industry to fall some 77 percent, to 2.1 billion cigars yearly. Then, suddenly, things changed. There was a 14.6 percent jump in sales in 1994, followed by a 31 percent rise in 1995.

"It was seen as one of life's affordable little luxuries, like fine wines and single malt scotches," Sharp said.

The soaring economy didn't hurt. Imports poured in from some 18 countries, and new outlets continued to sprout. Prices climbed. Then, as quickly as it arrived, the trend began snuffing out.

"It will never go back to what it was during the bonanza," said Lee Zyniecki, who has owned Edleez Tobacco for 19 years.

"The craze is over," said Norman Sharp, president of the Cigar Association of America.

One cigar aficianado who's holding out hope is David Wunder, manager of the Tinder Box tobacco shop in New York.

While admitting that, "The people who got into cigars just for the fad of it are no longer big-time smokers," Wunder isn't selling off the humidor just yet.

"The whisper through the industry is that in the year 2000 the Cuban cigar market will open. And then you're going to see another rush of people who want to try Cuban cigars," said Wunder.